10-K: LFC 2025 10-K: Loss narrows, dilution risk rises

Lingerie Fighting Championships grew revenue 57% in 2025 and cut its net loss by 70%, but incurred a gross loss, carried heavy going‑concern doubts, multiple debt defaults, and large dilutive notes and warrants.

Summary

• Revenue rose 57% to $208,485 in 2025 (2024: $132,978), driven by licensing (Maybacks) and advertising (Meta) gains.
• Cost of services increased to $237,659 (2024: $84,995), producing a gross loss of $29,174 versus a gross profit of $47,983 in 2024.
• Operating expenses were $420,868 (up 7%); interest expense was $532,402.
• Net loss narrowed to $567,160 (2024: $1,868,186), primarily due to a $490,784 noncash gain from changes in derivative liabilities.
• Cash at year-end was $24,093; total assets $106,213; current liabilities $6,438,960, including $2,935,853 of derivative liabilities.
• Working capital deficiency widened to $6,398,819 (up 8% year over year). Accumulated deficit reached $11,737,955.
• Cash flows: operating outflow $(312,822); investing outflow $(140,500) (digital assets); financing inflow $475,222 (convertible notes).
• Debt: $340,000 promissory notes in default and $938,974 of convertible notes in default as of Dec 31, 2025; accrued interest payable $1,119,975.
• Significant financing with Auctus Fund in 2025: $100,000 notes on Apr 30 and Jun 18, and $250,000 note on Aug 15, each at 12% interest with large warrants (up to 2.5B shares) and anti-dilution features.
• Reverse stock split 10,000:1 effective Feb 2, 2026; authorized common increased to 20,000,000; 576,936 common shares outstanding March 30, 2026.
• Subsequent event: March 3, 2026 convertible note for $110,000 (one-time interest $11,000), convertible at the lower of $0.20 or 75% of the lowest 15-day price.
• Management expects more 2026 events and improved monetization after UK shows grew social following to 5.3 million.

Sentiment

Score: 3

Explanation: StockSavvy.ai views the filing as negative overall: operational losses widened at the gross level, going-concern doubts persist, debt defaults and high-cost convertible financing with significant dilution risk overshadow the revenue growth.

Positives

• Revenue up 57% to $208,485 with new licensing (Maybacks) and increased advertising (Meta).
• Net loss reduced 70% to $567,160, aided by noncash derivative revaluation.
• Operating discipline kept opex growth to 7% despite expanded event activity.
• Social media reach expanded materially; recent events averaged nearly 10 million YouTube views, supporting future monetization.
• Cash increased to $24,093 at year-end (from $2,193) through $475,222 in note financing.

Negatives

• Core operations weakened: gross margin swung to a $29,174 loss due to higher production, promotion, and consulting costs.
• Working capital deficiency widened to $6,398,819; stockholders’ deficit deepened to $(6,332,747).
• High-cost capital structure: $532,402 interest expense and $2,935,853 derivative liabilities.
• Debt stress: $1,278,974 total notes in default (promissory $340,000; convertible $938,974) at year-end.
• Going concern uncertainty disclosed; continued dependence on external financing.
• Material weaknesses in internal controls; no independent directors and no code of ethics.
• Significant shareholder dilution risk from large, low-exercise-price warrants and variable/discounted conversion features.

Risks

• Substantial doubt about ability to continue as a going concern due to recurring losses, minimal cash, and reliance on financing.
• Multiple debt instruments in default totaling $1,278,974 and high accrued interest of $1,119,975.
• Extensive dilution risk from anti-dilution provisions, variable-rate and discounted conversion notes, and large warrant overhang (including 2.5B-share warrants).
• Material weaknesses in internal control over financial reporting (segregation of duties; insufficient written policies).
• Regulatory risk if events are deemed full-contact sports requiring athletic commission oversight.
• Revenue concentration and platform dependency (e.g., Meta, YouTube, Tubi) and credit risk from key customers.
• Cybersecurity risks acknowledged; reliance on third-party systems.
• Legal exposure from intellectual property and potential infringement claims.
• Market listing and Rule 144 availability risks tied to SEC reporting compliance.

Future Outlook

Management plans more live events in 2026 than any prior year and expects improved revenue and margins over the next 3–6 months, citing significant social media growth and increased broadcaster, investor, and sponsor interest following the UK shows.

Management Comments

• UK event spend in 2025 was an investment in long-term growth; social following rose from under 1.5 million to 5.3 million.
• Expect higher Meta revenue and broader broadcaster/sponsor interest to lift margins in the next 3–6 months.
• Plan to release more events in 2026 than any previous year.

Industry Context

StockSavvy.ai notes LFC competes in niche sports entertainment against scale players like WWE and UFC, but monetizes primarily through digital platforms and sponsorships. The strategy mirrors broader creator-economy trends where social reach can translate into advertising and licensing, yet platform policy changes and ad-market softness can quickly affect revenue.

Comparison to Industry Standards

• Compared with WWE (NYSE: WWE/TKO), which reported multi-billion-dollar media rights and live-event revenue, LFC’s $0.2M revenue highlights a micro-scale model reliant on digital platforms and small sponsorships.
• UFC (TKO) operates under long-term broadcast contracts and pay-per-view economics; LFC lacks comparable guaranteed media contracts, increasing volatility and financing dependence.
• Regional promotions like Bellator/One Championship rely on strategic investors and media deals; LFC instead utilizes convertible financing and warrants, exposing shareholders to higher dilution versus peers with equity or strategic capital.

Corporate Governance

Legal Proceedings

• No material legal proceedings disclosed as of December 31, 2025.

Related Party Transactions

• Accrued salaries to the CEO totaling $120,000 in 2025; total due to related party was $831,128 at December 31, 2025.
• In 2024, 10,000 shares were issued to the Director for services valued at $20,000.

Stakeholder Impact

• Shareholders face high dilution from large warrant issuances and variable-rate convertibles, alongside a 10,000:1 reverse split.
• Creditors’ risk remains elevated given significant liabilities, multiple note defaults, and negative cash flows.
• Employees are minimal (one employee); event contractors’ continuity depends on financing and event cadence.
• Customers and broadcasters could benefit from more frequent events, but execution depends on liquidity.

Next Steps

• Execute additional 2026 events to monetize expanded audience.
• Address amortization payments due in 2026 on Auctus notes per schedules.
• Remediate internal control weaknesses by adding qualified personnel and formal policies (targeted for 2026).
• Pursue further financing to fund operations, with potential equity or debt placements.

Key Dates

Recommendation

Persistent going-concern risk, widening working-capital deficit, multiple debt defaults, heavy reliance on variable-rate convertible financing with substantial dilution, and negative gross margin outweigh the revenue growth and net loss improvement from noncash items. Until the company secures non-dilutive capital and demonstrates sustained positive unit economics, risk-adjusted return skews negative.

Keywords

Lingerie Fighting Championships, BOTY, Auctus Fund, convertible notes, warrants, reverse stock split, derivative liabilities, going concern, sports entertainment, YouTube, Meta advertising, licensing, MMA wrestling, digital assets, dilution